Comparing Income Driven Repayment Plans PAYE vs REPAYE - PDF document

1 Comparing Income Driven Repayment Plans:
Comparing Income Driven Repayment Plans: PAYE vs. REPAYE PAYE (Pay As You Earn) REPAYE (Revised Pay As You Earn) New Direct Loan borrower as of 10/1/2007 and borrowed post 10/1/2011.No FFEL Loans. Available to all borrowers of Direct Loans regardless of when the borrower took out the loans. Borrowers can Consolidate FFEL Loans in order to qualify. All loans must be Direct Loans. For married borrowers filing separately, the AGI of only the borrower is used to calculate the monthly payment amount. For married borrowers filing separately, the AGI of both the borrower and the spouse are used to calculate the monthly payment amount. For two spouses both with Federal Student Loans, the monthly incomeiven payment amount is prorated between the spouses. ( spouse’s income, is not required to provide their spouse’s AGI.) For subsidized loans, the Secretary does not charge the borrower the accrued interest for a period not to exceed three consecutive years from the repayment start date. Following the established threeyear period, the Secretary charges 100% of the accrued interest. For subsidized loans, if a borrower’s monthly payment is not sufficient to pay the accrued interest (negative amortization), the Secretary does not charge the borrower the remaining accrued interest for a period not to exceed thre Following the already established threeyear period the Secretary charges 50% of the remaining accrued interest on subsidized loans during periods of negative amortization. For unsubsidized loans, the Secretary charges 100% of the accrued interest. For unsubsidized loans (including Direct PLUS Loans made to graduate students) the Secretary charges 50% of the remaining accrued interest during periods of negative amortization for the life of the loan A ll borrowers qualify for taxable forgiveness after 20 years . PAYE plan payments count as qualified payments toward Public Service Loan Forgiveness in 10 years if borrower meets all other qualifications. If repayment includes loans the borrower received as an undergraduate student or a consolidation loan that repaid only loans the borrower received as an undergraduate student may qualify fortaxable 20 years. If repayment includes a loan the borrower received as a graduate or professional student or a consolidation loan that repaid a loan received as a graduate or professional student may qualify fortaxableforgiveness after 25 years. REPAYE plan payments count as qualified payments toward Public Service Loan Forgiveness in 10 years if bor rower meets all other qualifications. following formula: ((AGI150% poverty guideline) * 15%)/12 For each year a borrower is in the IBR plan, the borrower’s monthly payment amount is recalculated based on 15% of discretionary income and family size information provided by the borrower The monthly payment will never be more than a borrower’s monthly St andard Payment. Monthly payments are calculated using the following formula: ((AGI150% poverty guideline) * 10%)/12 recalculated based on 10% of discretionary incomeand family size information provided by the borrower There is no cap on the monthly payment amount. Capitalization of interest occurs if a borrower can no longer demonstrate a Partial Financial Hardship or if the borrower exits the PAYE plan. Capitalizat ion of interest only occurs when the borrower exits the REPAYE plan. Principal and Interest X Interest Rat

2 e = Yearly Interest Accrual / 12 (months
e = Yearly Interest Accrual / 12 (months) = Monthly Interest Accrual $ X 12 (months) per month REPAYE (Revised Pay As You Earn)Married = Combined Incomes Payment Pro - rated for couples both with Federal Student Loans PAYE (Pay As You EarnMarried and file Federal Tax Separately = Separate Incomes Monthly Interest Accrual Tax Year 2017 Monthly Interest Accrual Tax Year 2017 Monthly Interest Accrual Tax Year 2018 Monthly Interest Accrual Tax Year 2018 Monthly Interest Accrual 2019 Monthly Interest Accrual Tax Year 2019 Monthly Interest Accrual FUTURE Monthly Interest Accrual FUTURE 25 Years Until Taxable Forgiveness 2 0 Years Until Taxable Forgiveness 10% Monthly Discretionary Income 10 % Monthly Discretionary Income AGI 150% Poverty Level Discretionary come 10% onths= They Pay You Accrue AGI 150% Poverty Level onths= They Pay You Accrue AGI 150% Poverty Level Discretionary come onths= They Pay You Accrue AGI 150% Poverty Level Discretionary come onths= They Pay You Accrue AGI 150% Poverty Level Discretionary come They Pay You Accrue They Pay You Accrue They Pay You Accrue They Pay You Accrue AGI 150% Poverty Level Discretionary come onths= AGI 150% Poverty Level Discretionary come 10% onths= AGI 150% Poverty Level Discretionary come 10% onths=